ch.16 marketing

What differentiates a distribution center and a fulfillment center?

A distribution center sends goods to company stores. A distribution center is a facility for the receipt, storage, and redistribution of goods to company stores; a fulfillment center is used to ship directly to customers.

In addition to merchandise and payments, information flows throughout a supply chain. Which of the following statements are a good characterization of the flow of information in a supply chain?

A manufacturer will send and receive information from buyers, stores, and distribution centers.

When Lenovo sells computers to Brownston College, it engages in a ________ transaction, but when it sells to students individually, it is a ________ operation.

B2B; B2C

Students of marketing often overlook or underestimate the importance of place in the marketing mix simply because

Because it happens behind the scenes.

Which of the following is required to build a successful strategic relationship?

credible commitments

If a firm declared that it wanted to develop a strategic relationship, but was unwilling to commit funds or any effort to make it succeed, there would be an obvious lack of

credible commitments. A strategic relationship cannot succeed unless each relationship partner is willing to make a genuine, credible commitment to the relationship. The behavior described in the question does not demonstrate such a commitment.

In order to anticipate demand, advertising and promotions must be coordinated with the

departments that control inventory. To anticipate demand, advertising and promotions must be coordinated with the departments that control inventory and transportation. Otherwise, customers would come in seeking a promotion and not find the product.

The role of the buyer in dealing with the manufacturer includes getting information, negotiating prices, arranging shipping dates, and

determining promotional events. A buyer may communicate directly with the manufacturer to get information and negotiate prices, shipping dates, promotional events, or other merchandise-related issues

Gianni made pies and sold them from her food truck to local businesses. This is an example of a(n)

direct marketing channel. There are no intermediaries between the buyer and seller in a direct marketing channel, as in this example.

A ________ is a facility for the receipt, storage, and redistribution of goods to company stores

distribution center

Marketing channels and supply chains comprise various buying entities that form relationships with one another. The basic motivating factor in these interactions is

each party wants something from the others.

When Walmart relies on its experience and knowledge to decide how to market a product without giving the supplier much of a say in the matter, this is an example of

expertise power

t/f: Universal product codes (UPCs) are used to describe products for inventory taxation purposes.

false A UPC tag is the black-and-white bar code found on most merchandise. It contains a 13-digit code that indicates the manufacturer of the item, a description of the item, information about special packaging, and special promotions. A UPC label or radio frequency identification (RFID) tag on the shipping carton that identifies the carton's contents is scanned and automatically counted as it is being received and checked.

t/f: Conflicts within a supply chain tend to be more pronounced when the members are part of a corporate vertical marketing system.

false Conflict is generally more pronounced when the channel members are independent entities. Marketing channels that are more closely aligned share common goals and are therefore less prone to conflict.

t/f: Distribution centers are always operated by distribution specialists.

false Distribution centers may be operated by retailers, manufacturers, or distribution specialists

t/f: Retailers generally have no prior knowledge of the merchandise they will be receiving from suppliers in any particular shipment.

false. An advanced shipping notice (ASN) is an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.

t/f: Quick response (QR) inventory systems allow retailers to maximize their inventory holdings.

false. Quick response (QR), also known as just-in-time systems in retailing, are inventory management systems that deliver less merchandise on a more frequent basis than in traditional inventory systems.

Nathan is glad his company finally converted to an RFID system. Now, he can be sure that can be sure that

he is aware of special promotions. The RFID indicates the manufacturer of the item, a description of the item, and information about special packaging and promotions.

At the BMW plant in Spartanburg, South Carolina, rather than use a typical order-to-delivery process, it has suppliers deliver parts every four hours when the plant is in operation. BMW uses a ________ inventory control system.

just-in-time (JIT) Just-in-time (JIT) and quick response (QR) both refer to inventory management systems designed to ship smaller quantities more frequently.

Manufacturers trying to implement a just-in-time delivery system need to start with

knowledge of customer demand.

________ enable the retailer to lower inventory investments systemwide

Distribution centers

While JIT systems have many benefits, they

make the logistics function more complicated. Although firms achieve great benefits from a JIT system, it is not without its costs. The distribution function becomes much more complicated with more frequent deliveries. With greater order frequency also come smaller orders, which are more expensive to transport and more difficult to coordinate. Therefore, JIT systems require a strong commitment by the firm and its vendors to cooperate, share data, and develop systems.

In the four Ps of marketing, ________ refers to all the activities required to get the right product to the right customer when that customer wants it.

place

Which element of the marketing mix specifically deals with supply chain management?

place

The ________ terminal records the purchase information and electronically sends it to the buyer at corporate office

point-of-sale (POS) The point-of-sale (POS) terminal records the purchase information and electronically sends it to the buyer at the corporate office.

LeeAnna knows she has to order her store's Christmas holiday merchandise in April to ensure delivery before the holiday season. LeeAnna is concerned with the supply chain management goal of

providing products at the right time.

H&M has adopted the inventory management system that delivers less merchandise on a more frequent basis than in traditional inventory systems. The firm gets the merchandise just in time for it to be used in the manufacture of another product or for sale when the customer wants it. This is an example of a ________ inventory system.

quick response (QR)

Which of the following are activities carried on in a distribution center?

receiving, checking, and storing merchandise Distribution centers coordinate inbound and outbound transportation and receive, check, and store merchandise.

Because manufacturers with JIT systems produce merchandise closer to the time of sale, they can

reduce inventories needed to satisfy retailers' demand.

t/f: Walmart may have ________ power if a supplier desperately wants to be associated with Walmart, because being known as an important Walmart supplier enables that supplier to attract other retailers' business.

referent Walmart may have referent power if a supplier desperately wants to be associated with Walmart, because being known as an important Walmart supplier enables that supplier to attract other retailers' business.

When Costco sells to consumers directly, it acts as a ________; when it sells to other businesses, such as a restaurant owner, it acts as a ________.

retailer; wholesaler

When Pete's Pizza wants tomatoes delivered in smaller batches more frequently, it offers its distributors an incentive in the form of special bonuses to change their schedules. Pete's demonstrates which kind of power?

reward

Which is an advantage of using a distribution center?

saves money since the storage space at a distribution center is generally less expensive than that of a store

Stores like Home Depot and Costco act as wholesalers when they

sell to contractors or restaurant owners.

________ give both members of the relationship an incentive to pool their strengths and abilities and exploit potential opportunities together.

shared goals

Steve managed an auto parts store in the 1990s. At that time, stockouts—failure to have the parts auto mechanics needed to do their work that day—increased the likelihood of the mechanics becoming customers of competing auto supply stores. To avoid this problem and keep his business customers, Steve most likely

stockpiled inventory, adding to the cost of providing auto parts. In response to supply chain inefficiencies—and particularly stockouts—many retailers in the 1990s stockpiled inventory, leading to higher inventory carrying costs.

Walmart needs P&G to satisfy its customers, and P&G recognizes that if it can keep Walmart happy, it will have more than enough business for years to come. Walmart and P&G recognize that it is in their common interest to be

strategic partners Walmart and P&G recognize that it is in their common interest to be strategic partners. Walmart needs P&G to satisfy its customers, and P&G recognizes that if it can keep Walmart happy, it will have more than enough business for years to come.

Stimulation Market Inc. manufactures educational toys. The company recently started buying paint for its toys from a Brazilian firm. This Brazilian company is part of Stimulations Markets'

supply chain.

In an administered vertical marketing system,

there is no common ownership, and the dominant member has significant power to impose its ideas and objectives. With an administered vertical marketing system, there is no common ownership or contractual relationships, but the dominant channel member controls or holds the balance of power.

Radio frequency identification tags are

tiny computer chips that transmit information about a container's contents.

Leona is the logistics manager for the Barnes & Noble bookstore chain. She is weighing the many benefits of the company's JIT system but will need to consider that just-in-time inventory management systems increase ________ costs

transportation costs

t/f: When manufacturers such as Avon sell directly to consumers, they perform both production and retailing activities.

true Avon acts as a retailer by selling directly to consumers, and as production when it transports the merchandise.

Which of the following statements is true regarding distribution centers?

They enable retailers to carry less merchandise in individual stores.

________ between supply chain members that is based on mutual benefits is key to developing and sustaining the relationship.

Interdependence

Marcie's Mats creates custom mats for homes. She operates out of two stores in the New York City metropolitan area. These are used to display sample mats and show the selection of available materials. Marcie is wondering where to store the basic mats that have been manufactured in advance and are customized on request. She is considering using a distribution center. Would this be a good decision?

No, the expense of a distribution center is not warranted for this amount of inventory.

In a retail supply chain, the ________ records the purchase information and electronically sends it to the corporate office.

POS terminal The point-of-sale (POS) terminal records the purchase information and electronically sends it to the corporate office.

When a customer purchases a television at Best Buy, which of the following information flows in the supply chain are started?

The sale is transmitted to Best Buy's distribution center to adjust inventory data.

Because of its size and relative power, Walmart can easily impose controls on small manufacturers, such as Brown Betty Dessert Boutique, but with large, powerful suppliers such as P&G, the control is more balanced between parties. Walmart's various marketing channel relationships offer examples of different forms of a(n) ________ marketing system.

administered vertical

Three types of vertical marketing systems

administered, contractual, and corporate—reflect increasing phases of formalization and control.

Ron has just received notification from a vendor that his clothing merchandise order has been processed and dispatched. Ron has just received a(n)

advanced shipping notice An advanced shipping notice is an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.

Today, when a customer orders merchandise from an online vendor, the vendor usually sends an immediate order confirmation message by e-mail. Usually within a day or two, a second message arrives stating that the order is in the mail. This second message is a type of

advanced shipping notice An advanced shipping notice is an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment.

Especially in the fashion industry where styles and trends change rapidly, a quick response system can

align deliveries more closely with actual sales.

The purchase information from each individual store is typically aggregated by the retailer as a whole, which creates an order for new merchandise and sends it to the manufacturer. This is an example of information flowing from the

buyer to the manufacturer. This represents Flow 3 (Buyer to Manufacturer): The purchase information from each store is typically aggregated by the retailer as a whole, which creates an order for new merchandise and sends it to the manufacturer. The buyer may also communicate directly with the manufacturer to get information and negotiate prices, shipping dates, promotional events, or other merchandise-related issues. demand.

When a firm is just starting out or entering a new market, it often

cannot choose from whom it buys or to whom it sells.

Yesterday, Marya overheard a surprisingly unpleasant encounter between the manager of the hardware store where she works and a sales rep who sells a well-known line of tools. The sales rep insisted that his tools should be more prominently displayed and that a better assortment would mean more sales. The manager had other plans and told him so, and the conversation turned into a loud argument. What Marya observed was an example of

channel conflict

When her company's dry goods deliveries were late for the third time, Pilar withheld payment from her supplier until it was back on schedule. This is an example of ________ power.

coercive

When Walmart threatens to punish or punishes the other channel member for not undertaking certain tasks, such as if it were to delay payment for a late delivery, this is an example of

coercive power. Coercive power is when a firm threatens to punish a channel member for not undertaking certain tasks.

In a(n) ________ marketing channel, none of the participants have any control over the others.

conventional (independent) In an independent (conventional) marketing channel, several independent members—a manufacturer, a wholesaler, and a retailer—attempt to satisfy their own objectives and maximize their profits, often at the expense of the other members. None of the participants have any control over the others.

The vertical marketing system that exhibits the most formalization and control is the ________ vertical marketing system.

corporate Three types of vertical marketing systems—administered, contractual, and corporate—reflect increasing phases of formalization and control.

Tesla Motors, manufacturer of luxury electric automobiles, represents a(n) ________ because it manufactures its own cars in Fremont, California, and it operates its own retail stores in high-foot-traffic locations such as malls and shopping streets.

corporate vertical market system Tesla Motors, manufacturer of luxury electric automobiles, represents a corporate vertical marketing system because it manufactures its own cars in Fremont, California, and it operates its own retail stores in high-foot-traffic locations such as malls and shopping streets.

More accurate sales forecasts are possible when retailers ________ rather than ________.

create one forecast for a distribution center; survey every current customer

A recent innovation by Amazon, the Vendor Flex program, seeks to lower overall transportation costs but also creates new forms of channel conflict with competitors. As a partner in the Vendor Flex program, P&G agreed to allow Amazon to build fulfillment centers within P&G's own warehouses, thus helping to eliminate some of the costs of transporting P&G's products to Amazon's fulfillment centers. Believing that the program was giving its competitor Amazon an unfair advantage, Target reacted vigorously, moving all P&G products from prominent end-cap positions in its stores to less prestigious and less visible locations. Target also stopped using P&G as its primary source of advice for planning merchandising strategies within each category. The conflict between Amazon and Target is an example of ________ channel conflict.

horizontal Horizontal channel conflict can occur when there is disagreement or discord among members at the same level in a marketing channel, such as two competing retailers or two competing manufacturers.

Distribution centers coordinate

inbound and outbound transportation and receive, check, and store merchandise.

In a(n) ________ marketing channel, several independent members each attempt to satisfy their own objectives and maximize their profits, often at the expense of the other members.

independent In an independent (conventional) marketing channel, several independent members—a manufacturer, a wholesaler, and a retailer—attempt to satisfy their own objectives and maximize their profits, often at the expense of the other members. None of the participants have any control over the others.

In a(n) ________ marketing channel, one or more intermediaries work with manufacturers to provide goods and services to customers.

indirect

A local furniture store buys furniture from various manufacturers and resells the furniture to its customers. What type of marketing channel does this represent?

indirect Whereas a direct marketing channel uses no intermediaries, an indirect marketing channel uses one or more intermediaries to provide goods and services to customers. For example, automobile manufacturers such as Ford and General Motors often use indirect distribution, such that dealers act as retailers.

Because Walmart has vast information about the consumer goods market, it might exert ________ power over P&G by providing or withholding important market information.

information power

Coercive power

is when a firm threatens to punish a channel member for not undertaking certain tasks.

In a vertical marketing system, if the system is ________, conflict is less likely to occur.

more formal In a vertical marketing system, the members act as a unified system; the more formal the vertical marketing system, the less likely conflict is to ensue.

With more frequent shipments associated with quick response (QR) systems, a retailer is

more likely to have what customers want. A quick response (QR) system allows smaller, more frequent deliveries of goods that are matched to recent sales. In this way, as trends change, the retailer will not have a store full of older products but can instead adapt quickly to changing consumer preferences.

What problem has developed as a result of increased package delivery?

package/"porch" thieves

Ilya had just taken over his family's business after spending ten years in the marketing department of a large corporation. He met with a representative from one of his firm's biggest customers, who told him, "We should think about how we can make the pie bigger rather than fighting over the size of the slices." He had expected a more cutthroat approach rather than this call for a

partnering relationship. Ilya's customer is proposing a partnering relationship, in which he and the customer will look for opportunities that are mutually beneficial and will seek to maintain the relationship over the long term.

t/f: Marketing channel management and supply chain management are virtually the same.

true Marketing channel management, also referred to as supply chain management, refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize systemwide costs while satisfying the service levels their customers require.

t/f: Radio frequency identification (RFID) tags automatically transmit information about a container's contents or individual products.

true Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container's contents or individual products. Approximately as large as a pinhead, these RFID tags consist of an antenna and a chip that contains an electronic product code that stores far more information about a product than bar (UPC) codes can. The tags also act as passive tracking devices, signaling their presence over a radio frequency when they pass within a few yards of a special scanner.

t/f: Marketing channel relationships evolve when the parties have common goals.

true Although conflict is likely in any marketing channel, it is generally more pronounced when the channel members are independent entities. Marketing channels that are more closely aligned, whether by contract or ownership, share common goals and therefore are less prone to conflict.

t/f: Marketing channel management adds value because it gets products to customers efficiently, quickly, and at low cost.

true Marketing channel management adds value because it gets products to customers efficiently, quickly, and at low cost.

A(n) ________ marketing system is a supply chain whose members act like a unified system

vertical A vertical marketing system is a supply chain in which the members act as a unified system and there are three types: administered, contractual, and corporate

Franchising is the most common type of contractual ________ marketing system.

vertical Franchising is an example of a vertical marketing system that is coordinated through contractual relationships. In fact, franchising is the most common type of contractual vertical marketing system.

The Stanley company wants Home Depot to carry all its tools but not the tools of its competitors so that Stanley can maximize its sales. But Home Depot carries a mix of tool brands so it can maximize the sales in its tool category. This misalignment of goals will likely lead to a ________ channel conflict.

vertical This is an example of vertical channel conflict, a type of channel conflict in which members of the same marketing channel. When supply chain members that buy and sell to one another are not in agreement about their goals, roles, or rewards, vertical channel conflict or discord results.